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Stagecoach: Wells Fargo and the American West

Stagecoach: Wells Fargo and the American West

by Philip L. Fradkin, J.S. Holliday

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Sweeping in scope, as revealing of an era as it is of a company, Stagecoach is the epic story of Wells Fargo and the American West, by award-winning writer Philip L. Fradkin.
The trail of Wells Fargo runs through nearly every imaginable landscape and icon of frontier folklore: the California Gold Rush, the Pony Express, the transcontinental railroad, the


Sweeping in scope, as revealing of an era as it is of a company, Stagecoach is the epic story of Wells Fargo and the American West, by award-winning writer Philip L. Fradkin.
The trail of Wells Fargo runs through nearly every imaginable landscape and icon of frontier folklore: the California Gold Rush, the Pony Express, the transcontinental railroad, the Civil and Indian Wars. From the Great Plains to the Rockies to the Pacific Ocean, the company's operations embraced almost all social, cultural, and economic activities west of the Mississippi, following one of the greatest migrations in American history.
Fortune seekers arriving in California after the discovery of gold in 1849 couldn't bring the necessities of home with them. So Wells Fargo express offices began providing basic services such as the exchange of gold dust for coin, short-term deposits and loans, and reliable delivery and receipt of letters, money, and goods to and from distant places. As its reputation for speed and dependability grew, the sight of a red-and-yellow Wells Fargo stagecoach racing across the prairie came to symbolize not only safe passage but faith in a nation's progress. In fact, for a time Wells Fargo was the most powerful and widespread institution in the American West, even surpassing the presence of the federal government.
Stagecoach is a fascinating and rare combination of Western and business history. Along with its colorful association with the frontier -- Wyatt Earp, Black Bart, Buffalo Bill -- readers will discover that swiftness, security, and connectivity have been constants in Wells Fargo's history, and that these themes remain just as important today, 150 years later.

Editorial Reviews

Publishers Weekly
Fradkin, who has written eight books about the American West, offers a swashbuckling account of Wells Fargo's early mail and express delivery service. In the 1850s, executives hit upon a scheme to get around laws to protect the U.S. Postal Service monopoly. Wells Fargo bought stamped post office envelopes and double-stamped them with the company fee. Customers paid two to three times the government rate to ensure the mail's swift and certain delivery out west, where the Postal Service had a dismal performance record. Armed guards protected the cargo on Wells Fargo's express service, which shipped valuable post via stagecoach. The cargo, mostly precious metals from Western mines, was the bedrock of the company's first "deposits," giving the young institution an instant asset base. Given Wells Fargo's enterprising image today, it is surprising to learn how many times the company stumbled when new technology loomed. Executives ordered 30 pricey new stagecoaches just before the transcontinental railroad was completed in 1869. They scoffed when government trustbusters threatened to launch a parcel post in 1913. In his final chapter, Fradkin skims over Wells Fargo's breathtaking rise from a single San Francisco outpost in 1918 to a vast financial services institution. He does present a convincing argument that in this age of instantly manufactured brands, Wells Fargo earned its marketing image of rugged pioneerism the hard way through 150 years of struggle and corporate survival. (Feb. 1) Forecast: Those interested in western lore or corporate branding will enjoy this intriguing tale of how one corporation adapted to the pioneer days of the Old West. Readers seeking a detailed financial history of Wells Fargo the bank will be disappointed. Copyright 2001 Cahners Business Information.
Kirkus Reviews
A chronicler of west-of-the-Pecos America turns up a tale of horses, cantaloupes, and hard cash.
From the Publisher
Jonathon Kirsch The Los Angeles Times Book Review Both a colorful work of frontier history and a cool-headed corporate biography....Fradkin surveys the history of Wells Fargo in all its sweep.

The Economist Fradkin has neatly compacted this sprawling history into a slender volume.

Michael Carlson Financial Times (London) This lively history...is as much a story of corporate machinations back East as it is of adventure in the West....One relishes the anecdotes about heroes who ought to be better remembered.

The Wall Street Journal A great story of brave spirits in the American West, and of entrepreneurial spirit as well.

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Any account of Wells Fargo & Company involves a history of the more dramatic aspects of the Old West. There is, however, another story that is quite interesting in its own right and certainly more relevant to our times.

The company's operations bisected almost all social, cultural, and economic activities in the trans-Mississippi West and were conducted in such diverse physical landscapes as the Great Plains, the Rocky Mountains, the Great Basin Desert, the wet Northwest, the dry Southwest, the Sierra Nevada, and the Pacific coast.

Wells Fargo's early history meandered through and illuminated the booms and busts of gold and silver mining rushes, the collection and distribution of mail, the rise and failure of banks, the Pony Express, over-land staging, the building of the transcontinental railroad, the Civil War and the Indian wars, the violence of robbers and gunfighters, the development of agriculture, the rise of capitalist entrepreneurs, and the regulation and disbanding of monopolies. In fact, more than any government agency or any other commercial enterprise, the history of Wells Fargo mirrored the history of the American West through the second decade of the last century.

Follow Wells Fargo and you follow the path of money and products through a vast network of western trails. Wells Fargo was a business dedicated to remaining in business and making a profit, which was sometimes considerable and a few times excessive. The company has managed to operate for one hundred and fifty years, an unusual length of time in a region renowned for its economic vicissitudes and the transience of its population. Along with the nostalgic appeal of its Old West identity, speed, security, service, and the ability to connect people, money, and goods have been constants in Wells Fargo's long history.

There is a set of historical bookends that illustrates Wells Fargo's long reach from the era of sailing ships to the age of the Internet.

On July 30, 1844, the twenty-two-gun sloop Levant anchored off Sausalito in San Francisco Bay. The passage of the American naval vessel from Hawaii had taken an unusually long three weeks. A few days later a party of seven rowed ashore. William A. Richardson, a middleman between the governing Mexicans and visiting foreigners, provided the group with horses and a guide for purposes of hunting. They rode north to the San Rafael Mission in what would become known as Marin County, just north of the Golden Gate.

A young acting lieutenant, Louis McLane Jr., kept a journal. He was amazed by the abundance of wildlife. "The whole country around is covered with quail & deer -- the latter wild," he wrote.

They reached the mission in time for dinner, which was mutton: "a great rarity in this country, where a man kills a fat Beef for the quarters & a deer for the saddle [a prime cut of meat]," McLane commented.

Their host at the run-down mission, Timothy Murphy, managed the property for the Mexican government, California then being part of Mexico. Murphy was pleased to see them, since he only encountered one or two fellow Anglos a year. After dinner they mounted fresh horses and tracked down the large doe McLane had wounded earlier in the day. The dogs finished her off. Other members of the party shot two more does, and McLane bagged a fawn before they retired from the field.

The next day the group departed for the return ride to the ship before breakfast. They saw more than one hundred deer, but only managed to shoot three bucks, as the large party made too much noise. The three-hundred-pound Murphy regaled them with stories about grizzly bears, one of whom had pawed him in the back three weeks previously. "He showed us the wound, barely healed," said McLane.

It was a taxing day. The nine hours in the saddle were "the hardest riding I have ever seen or ever expect to see." The lieutenant had a fair amount to say about the durable California horses, finding them "swift, surefooted & of great bottom." They were much hardier than the eastern horses he was used to. McLane looked about and saw a bountiful land: "The pasturage is excellent -- fine grass in the valleys & wild oats on the hills & mountains. In consequence, both horses & cattle are in fine order."

For a time, horses would power the stagecoaches that drove the commercial empire McLane oversaw on the West Coast. The offspring of a distinguished Maryland and Baltimore family -- his grandfather served as a colonel in the Revolutionary War and his father was a congressman, U.S. senator, ambassador to the Court of St. James's, and secretary of treasury and secretary of state in the cabinet of President Andrew Jackson -- McLane offered this assessment of his future domain: "From all I can learn Oregon has no good harbor, is unhealthy & has large tracts of poor Land. California has several fine harbors, (this bay of San Francisco, is one of the best in the World) has very little poor land & is remarkable for the purity of its atmosphere."

Louis McLane would return to San Francisco to head the Wells Fargo office in what had become a thriving city by the mid-1850s. He would eventually take over the West Coast operations and then ascend to the firm's presidency in New York City.

Some tens of millions of additional inhabitants later, Wells Fargo was firmly ensconced in California and the West in 1996, having gobbled up such lesser entities as Crocker and First Interstate banks, doubling in size each time. Wells Fargo was second only to Bank of America, which had been taken over by a North Carolina bank. It was the oldest bank in the West.

Wells Fargo had become so large and so successful that it made a tempting target for an aggressive "in-your-face" advertising campaign by Glendale Federal Bank, which was seeking to entice customers following Wells Fargo's takeover of First Interstate. If imitation is the sincerest form of flattery, then the southern California bank was guilty of gross adulation.

The bank's advertising agency, the aptly named Wise Guys of Pasadena, hired a tug to pull an eighty-foot barge around San Francisco Bay. Two sail-like square banners were rigged on the barge's deck. One had the international sign for no, a red circle and slash, superimposed over a stagecoach pulled by six horses -- the Wells Fargo icon. The other banner sought to emulate the western theme that Wells Fargo has so successfully employed over the years: "Hit The Trail," it stated. "The other way to bank."

The campaign backfired. In an era when stadiums were being named after Internet companies, schools sold space for advertising in textbooks, and airships and biplanes circled lazily overhead with their forgettable messages, the commercialization of the ad-free waters of San Francisco Bay was too much. There was an outcry. One public agency banned nautical advertising in the wake of the ill-conceived campaign. Very soon thereafter Glendale Federal disappeared in a merger.

What the campaign demonstrated, however, was the drawing power and value of a recognizable corporate identity, or brand, as a company's Geist is now called. David A. Aaker, a former professor of marketing strategy at the University of California at Berkeley and vice chairman of Prophet Brand Strategy in San Francisco, wrote in his book Managing Brand Equity:

A study of banks in California confirmed that their associations are very similar with respect to money, savings, checking account deposits, and tellers. Nothing distinctive -- with the exception of Wells Fargo, which has had a host of associations going along with their ubiquitous stagecoach. In an industry in which similarity is the norm, the stagecoach is an enormous asset, in part because of the richness of the concept, In addition to providing associations with the Old West, horses, and the gold rush, it also effortlessly is linked to reliability in the face of adversity, adventurousness, independence, and even building a new society out of wilderness.

How true are these associations? Time -- in this case one hundred and fifty years -- would tell.

There are two layers to this story, as Henry Wells pointed out in an 1864 speech to the American Geographical and Statistical Society. Wells cited to that august body the need for "hard facts." But as one of the founders of the express business, and American Express and Wells Fargo in particular, he said the "Romance of the Express" also had its appeal. "I could tell of midnight adventures in the forest; of perils in the waters; of perils by robbers; of awful catastrophes...[and] of humorous, pathetic, and tragical occurrences."

The facts and romances of the express business and the American West are intertwined. The realities and myths need to be separated. A business that spans the history of the region provides the perfect tool for that exercise.

The emphasis of this book is on the period from 1852 to 1918 when Wells Fargo was an express company. During those sixty-six years, Wells Fargo made three major contributions to the well-being of the West and the nation as a whole. First, the company served as the principal communications conduit between East and West; second, it contributed to the Union victory in the Civil War; and last, it shipped fresh vegetables and fruits via fast refrigerated express, thus ensuring better health in the colder regions of the country. After 1918, Wells Fargo was just another bank until its reemergence as a major national financial institution in the 1990s.

Copyright © 2002 by Philip L. Fradkin

Part I



Imagine a business that combines the communications aspects of letter mail, e-mail, faxes, and the telephone; the transportation of heavier goods by parcel post and express mail, such private carriers as United Parcel Service and Federal Express, and an armored car service; and the plethora of financial arrangements supplied by modern intrastate, interstate, and international full-service banks. That was an express company in the nineteenth century; there simply is no equivalent today.

Wells Fargo came into the world as the younger sibling of the American Express Company, both having common parents. The two companies exist to this day as totally separate entities -- one headquartered in San Francisco and the other in New York City. Wells Fargo's parents were distant overseers. Separation and a measure of maturity occurred at age seventeen.

Almost everything in the American West, meaning what lay beyond the Mississippi River, was strange and new to easterners in the mid-nineteenth century. The lack of rainfall, a vertical landscape of tremendous diversity, and the chimera of instant mineral riches lying just beneath the surface of the earth were the most startling differences. Imported institutions, including businesses, had to adjust to disparate natural conditions and human needs or they would wither and fail.

When Louis McLane, who resigned his naval commission in January 1850, stepped ashore in Gold Rush San Francisco four months later at the age of thirty-one, he commented in a letter to his wife of ten months: "Gold. Gold. Gold is the all absorbing idea here. It affects everything and everybody." Real estate, including underwater lots, was also a hot item. "Just now everyone who has money at command is speculating in lots. You hear of some new town or city (on paper) every week and the sales are real....Money can be made out of it by any man who will set down, watch the current & not hold on too long." McLane sat down for a while.

While waiting to go into the steamboat business between San Francisco and Sacramento, he noted the poor level of mail service. "I know of no place where the post office wants more reform than here. Those who don't take boxes may wait a week & then not be served," he said. A box tax, "a very convenient piece of bribery," brought quicker service to box-holders. The lonesome McLane justified a bribe on the basis that "hope deferred maketh the heart sick."

A private express service, McLane said, was safer, surer, and speedier than the federal postal service. "You must know that no one in California mails an inland letter but sends by Express." He added, "The miners give their address & power of attorney to the Express agent who takes their letters out of the post office in San F. twice a month and delivers them to every town & camp in the placers...."

There was opportunity here, to be sure. But no express service carried the name of Wells Fargo, yet. The major players were in place in New York City. Such a company would soon become a reality.

For an express business to succeed there were three functions that needed to be fulfilled: reliable communications, speedy transportation, and secure banking.

For most of the history of this country, the mail was the principal means of communication. It was central to our being as a nation. Daniel J. Boorstin, Pulitzer Prize-winning historian and former Librarian of the Library of Congress, wrote of the mail: "No American institution has been more intimately involved in daily hopes and fears. Nor has any institution been more effective in cementing community or more essential to the function and growth of a democratic government."

Supposedly a monopoly established by law, the Post Office charged high prices for poor service in 1840. It cost eighteen cents to send a letter from New York City to Troy, New York, but only twelve cents to ship a barrel of flour over the same route. (For longer distances, the letter rate was twenty-five cents.) As a result, private express services who employed messengers proliferated. They carried the mails at up to one-fifth the cost of the government service. The Post Office arrested messengers and brought suit against some of the express services.

The harassment didn't bother the private concerns. Henry Wells, a partner in an upstate New York express company, proposed that his firm take over the entire postal business of the government and charge five cents for a letter.

"Zounds, sir," reportedly replied an assistant postmaster general to Wells's proposal, "it would throw 16,000 postmasters out of office!"

The appointment of postmasters was a major source of political patronage. Congress did not wish to do away with this "engine of patronage." So the solution would have to be an adjustment to marketplace realities and tightening the monopoly.

The 1845 Postal Act reduced the cost of postage and made the government monopoly on letter mail virtually airtight. The law, however, was honored more in the breach than observed in the West, where expediency and selective enforcement were the informal laws of the land. This was a time of buccaneers, both in the gold fields and in the halls of commerce. Wells Fargo and other express companies became, in effect, opposition post offices.

The fast transportation function of the express service had a colorful history that went back to runners on bare feet and riders on horses. "Life and death often depended upon their speed, and not a few illustrious political offenders have had to thank the riders for their timely relief from the edge of the axe, or the pressure of the rope," A. L. Stimson wrote in History of the Express Business. "Even whole cities, when about to yield to besieging armies, have been saved by these expresses."

Where railroads and steamboats had replaced horseback riders and stagecoaches on the major routes in the East by the 1840s, some of the romance involved in swift delivery had been lost. Looking back some years later, Henry Wells recalled:

I was over the road between Albany and Buffalo for eighteen months, and for one year of that time I never lost a [weekly] trip. The railroad, where it was in existence, was a strap rail, very suggestive of snakeheads, and given to run-offs; and the common road, of which there was sixty-five miles, was to be endured in summer, and in the spring and fall was simply -- horrible. I have been eighteen nights out of twenty-one upon the road, and "still live."

Besides the prosaic items of commerce and personal correspondence, Wells carried shucked oysters from Albany to Buffalo at the cost of three dollars per one hundred. The oysters caused a sensation when they arrived in Buffalo. The same enterprising caterer who ordered the oysters via Wells's express moved on to Chicago, where he cooked a lobster dinner delivered by express on the prairie. Wells defined his service as "the business of carrying parcels and packages as fast as possible, with special care to their safety in transportation and their sure delivery."

Wells credited banking, the third function of an express business, with helping him prosper. When the federal government closed the Bank of the United States in 1836, the only interbank messenger service ended with it. Paper financial instruments, hard cash, and bars of gold need to be moved. It was costly for the banks to undertake this specialized service, so the express companies performed it. A natural alliance was formed between the two business entities, one that Wells Fargo and other express companies would commingle in California.

California, however, was different. On the West Coast the means of monetary exchange was not symbolic paper money; it had to be a tangible entity. It was a cattle hide- and metal-based economy.

The dried hides of cows that could be turned into leather were known as "California bank notes" during the 1840s. With annexation, the coins of the realm were minted, at first privately by private concerns and then by the federal government. The coins were struck from the very minerals -- namely, gold and silver -- that were found within the territory. Gold and silver were called "our twin staples" by a California newspaper. Metallic money meant greater weights for express companies to carry.

Where the markup on goods imported from the East could be as high as 1,000 percent and instant wealth was a cultural totem, large sums of money were exchanged and smaller amounts were disdained. Following California statehood in 1850, the smallest denomination was a "bit," roughly 12.5 cents. Two bits equaled a quarter. In the 1860s, the dime was the smallest denomination, anything less being associated with poverty. The next decade saw the introduction of the detested nickel. The Daily Alta California, the state's leading newspaper, referred to the nickel as being "half-brother to arsenic." On the East Coast, greenbacks (called "this monster serpent, paper money" in California) and the lowly copper penny were in use. Such base metals as copper and nickel were shunned in the West.

Gold Rush Californians, mostly easterners who had had unfavorable experiences with banks, regarded those institutions and bankers "as something inherently evil." The legislature prohibited banks, but it failed to provide any means of enforcing the law. Banks, however, were a necessary evil, given the need to convert a mineral into a means of purchasing goods or something that could be easily transported and stored. Informal banking practices grew from merchants extending credit, dabbling in the buying and selling of gold, and operation of express services.

Government interference and regulations were unknown. Reputation, meaning the appearance or the reality of being solvent, substituted for regulation. Anyone could hang out a sign stating "Bank," as Wells Fargo and other express companies did. Expediency was the law, and it worked most of the time. On occasion, however, depositors were stung badly. There were scares, panics, and failures.

The need for adaptation in this new financial environment was described by Ira B. Cross, a professor of economics at the University of California who wrote a banking history of California seventy-five years after Wells Fargo arrived in the state. Cross said, "The conditions that existed at that time did not make for the establishment of banking institutions such as were commonly found in the eastern states....Trafficking in gold dust dominated all channels of finance....California was no place for financiers trained in the banking customs and practices of the more settled communities."

Henry Wells and William G. Fargo, who both began their express careers as messengers in upstate New York, joined forces in 1845 and commenced the process that would result in bringing the functions of communications, speedy transportation, and banking together in California. Both were stern-visaged, bearded men who exuded rectitude. Wells was the mediator and Fargo the aggressive entrepreneur.

Various express companies in which Wells and Fargo had an interest were formed and dissolved as the industry consolidated during the formative years of the late 1840s. Creation of the American Express Company in 1850 was the result of their joint endeavors. Wells was the first president and Fargo the secretary. The other faction on the board of directors was headed by John Butterfield. Fargo and Butterfield were both strong-willed and frequently clashed.

Wells and Fargo had consistently pushed their separate businesses westward from upstate New York, reaching as far as Chicago and St. Louis. With the surge of new business generated by the California Gold Rush, it made more sense to start from the other end of the continent and progress eastward. The American Express board of directors debated the proposal for a western express service in early 1852. Tempers flared. A successful western venture would add to Fargo's prestige and power. Butterfield opposed it, and he had the votes to defeat the proposal.

Ten days later Wells and Fargo invited a group of investors to the Astor House in New York. Wells Fargo & Company was formed on March 18, 1852, two years to the day after American Express had come into existence. Butterfield did not miss the significance of the date, nor would he forget. A former stagecoach driver, Butterfield was a legendary swearer. Years later the mild Wells recalled: "All of the profanity that one head could hold, or one tongue utter, was used to express his friendship toward me and Fargo."

Gold Rush California

Like American Express -- the immediate business model -- Wells Fargo was not incorporated; it was established in New York as a joint stock association. That meant the shareholders (the directors, for the most part) were personally liable for losses, but they could act autonomously and in total secrecy. There were no reporting requirements, neither to bothersome stockholders nor government overseers. The company was capitalized at $300,000, an amount equal to approximately $6 million in 2000, but it is unlikely there was anywhere near that amount of cash available at the time.

Edwin B. Morgan, an upstate New York merchant and banker, was named the first president; and Henry Wells and William Fargo faded into the background as powerful members of the board of directors. Although their names would be forever associated with the company that became a western institution, their main interests lay elsewhere.

Both men took a much more active role in the affairs of American Express. Wells soon retired to upstate New York and established Wells College for women in Aurora. His health and business acumen deteriorated in the 1860s. Fargo vigorously pursued other business interests and was mayor of Buffalo for two terms. He would serve briefly as president of the company that bore his name. Although Fargo remained a director of Wells Fargo until his death in 1881, he was president of American Express for a long time, vice president of the New York Central Railroad, and a director of other transportation concerns, including the Northern Pacific Railroad, whose express service competed with Wells Fargo. During their tenures as directors of Wells Fargo, each made only one short trip to the West Coast.

The principal agents in San Francisco ran the business on the ground and were subject to the vagaries of the mail as far as policy was concerned. If the ships did not sink, it took three to four months for a letter to be sent and an answer received. (The three letters Louis McLane wrote his wife in 1851 took an average of fifty-four days to travel one way from San Francisco to Baltimore via the Isthmus of Panama.) The president and directors in New York set policy. They struggled to keep up with fast-breaking developments and sought to understand what was happening in that strange, distant land.

A New York State mentality and American Express directors dominated the Wells Fargo board for its first seventeen years. Four of the seven directors of American Express were on the first nine-member Wells Fargo board. They were: Wells, Fargo, Johnston Livingston, and James McKay. Morgan -- the first president, a longtime friend of Wells and Fargo's brother-in-law -- was also a director. The banker Danford N. Barney became president of Wells Fargo in 1853 and served in that position until 1866. He also headed two other American Express offshoots.

Two Wells Fargo agents arrived in San Francisco in the early summer of 1852. Samuel P. Carter of American Express, who had been an express and telegraph agent for Wells in Albany, handled the express side of the business in California. Reuben W. Washburn, a Syracuse banker, took charge of the monetary transactions. Prices were 400 percent over what was charged in New York, and Carter apologized to Morgan for the cost of office space: "An awful price, I know, but it was that or nothing." The company opened its San Francisco office on July 13, 1852, at 424 Montgomery Street, on virtually the same site as the current corporate headquarters at 420 Montgomery Street. The brick building was located in what was called a fireproof block, fire being the scourge of early San Francisco.

Wells Fargo was not alone. In the Register of First Class Business Houses in San Francisco, fourteen banks, including Wells Fargo, were listed under "Banking and Exchange" in October. Other banks were found under such categories as "Banking and Commissions" and "Real Estate and Stocks." Besides Wells Fargo, there were four other aggressive advertisers for express services in the Daily Alta California, all using the printer's stock illustration of a sailing vessel as their identifying mark in ads.

Like a modern-day marketing rollout, Wells Fargo ads blossomed that summer in San Francisco, inland California, and Portland newspapers. A typical ad stated that Wells Fargo specialized in shipping "GOLD DUST, BULLION, SPECIE, PACKAGES, PARCELS & FREIGHT OF ALL KINDS, TO AND FROM NEW-YORK AND SAN FRANCISCO: Thence to Sacramento, Stockton, Nevada, Marysville, Sonora and all the principal towns of California and Oregon. They will also purchase and sell Gold Dust, Bullion and Bills of Exchange; pay and collect Notes, Bills and Accounts, &c. &c." As principal offices, the Montgomery Street address was listed along with the New York City address on Wall Street. The impressive figure of $300,000 and the names of the nine directors were given. At the bottom were the names of the two principal California agents.

By spending money on twelve branch offices, agents, and advertising, Wells Fargo quickly established a beachhead in 1852. During the last five months of that first year, the firm shipped $312,000 worth of gold to New York, compared to $5.5 million shipped by its main competitor, Adams & Company. Carter and Washburn acquired smaller express companies in the first of what would be many subsequent mergers and acquisitions, and they made mutually advantageous arrangements with existing ones. By such means the company expanded inland via Stockton and Sacramento and then moved further eastward into the central gold districts of the Sierra Nevada foothills.

Mail was accepted at its offices and picked up at post offices for delivery into areas not served by the government. One of Wells Fargo's future agents, Charles T. Blake, wrote home from the diggings at Sarahsville: "If you write me through the P.O., address Auburn. But the surest way of reaching me is through Wells-Fargo and Co's Express."

From the start, Wells Fargo paid close attention to the marketing and public relations aspects of establishing and expanding a business. "We were very particular in civilities to the newspapers," said Wells. Newspapers were carried free so that other newspapers in those pre-wire service days could copy the news and credit Wells Fargo for delivering it. Much like a town crier, election news was rushed westward and announced with fanfare. "The recent important intelligence of the [1852] presidential election gave opportunity for the display of great enterprise and daring on the part of the various [express] companies here," commented the San Francisco Herald, which singled Wells Fargo out for supplying the first news and being "a firm which has gained rapidly in public favor and is now fully and successfully established."

Within the state the Daily Alta California acknowledged receipt, via Wells Fargo messenger, of "carefully prepared special [election] returns" from the gold country. There were much-publicized pony express races between rival companies that were covered breathlessly by the press. Wells Fargo did not win all the races; but the name was repeated endlessly -- a publicist's dream.

Image was important. Agents comported themselves like gentlemen, were seen with the right people, joined the appropriate civic organizations. At the top were the directors, who were prominently listed in the advertisements. "A glance at the list of directors will satisfy anyone of the unlimited confidence which may be reposed in the establishment," commented one California newspaper, whose editor, and certainly the vast majority of readers, had no way of knowing who all the nine men on the East Coast were.

Underneath the paper-thin surface of what little polite society existed, California was an entrepreneurial free-for-all -- a gouging, spitting, mud-wrestling match between unrestrained capitalists whose only rule was to remain in the ring for as long as possible.

The principal Wells Fargo employees in California felt that the officers of the company back in New York did not understand what was happening in California. Capital, and lots of it, was needed to purchase gold dust from the miners. In return, miners received gold coins or drafts -- bills of exchange -- that were sent home in duplicate or triplicate copies via different mails in order to assure their safe arrival. The first copy to be delivered was paid. Money -- quite a lot, actually -- could be made on these exchanges.

Carter and Washburn were desperate for more capital; $50,000 was not nearly sufficient. They needed $100,000 to $150,000. The two agents borrowed from another bank to buy gold dust and practiced subterfuge: "It is understood here that our Capital is ample, and we do all we can to encourage the idea, but we dare not venture on a kind of business which would immediately show its fallacy, and expose our weakness." Washburn continued in a letter to the New York office: "Banking in San Francisco is a very different thing from Banking in the City or State of New York." Wells Fargo's credit in California was no better than that of other third-rate banks. The principal agent for banking added: "Our connection and supposed identity with the American Express Company is no doubt an advantage, but it aids us only to a very moderate extent -- much less than some of our Directors seem to suppose."

Gold, not paper securities and notes, was the bedrock on which business was conducted in California. "This is the best Country that I know of to make money with money," wrote Washburn, "but the worst to do a Commercial or Banking business in without money, and plenty of it." The directors lacked the cash; it would take another year for them to raise the working capital for California to $150,000.

The personnel on the two coasts were at odds with each other. The directors wanted the California agents to concentrate on the more glamorous San Francisco-New York run. Carter thought he could eventually show a greater profit on the domestic express business, which was beginning to pick up letters, a practice that was "making and keeping friends."

The Wells Fargo California operation was a classic case of management by distant fiat. In letter after letter, Carter and Washburn pleaded that a director come out, spend three months, and see for himself what the realities were. They were glad to hear that Wells was on his way, but they also wanted Morgan and Fargo to visit. As an enticement, Washburn mentioned to Morgan the opportunity to make "perfectly safe" investments outside of Wells Fargo that would yield up to 50 percent in yearly interest.

The infighting on the American Express board, of which Wells was president, had reached its most intense level. Wells, the mediator who had a habit of disappearing at crucial times, decided to take a three-month leave of absence and travel to California in December of 1852. The board of directors insured his life.

Wells was exuberant upon reaching the Pacific Ocean. "Give me credit of being the first man across the Isthmus in a race of six hundred and all nearly men," he wrote his friend Morgan, "and very many are not in now and will not be for 24 hours. I passed everything on the road. I think for the dry season this is a tolerable moist climate. It has rained about six hours and part of the time poured." (Wells was on a mule, and undoubtedly his passage was expedited by the local express agent; most walked.)

By the time Wells reached San Francisco on February 5, 1853, fifteen fellow passengers had been buried along the way and a large number were ill when they disembarked. But Wells was fit. It was to be a whirlwind inspection tour of three weeks, rather than the desired three months, for the first director to visit California. He toured Sacramento for one day and then returned to San Francisco, where he stayed for the remainder of his time in California. Wells's goal, he said, was "to understand our true position, the wants of the business etc etc."

There were differences in attitudes between East and West. "I am called sanguine at home but I am an old Fogey here and considered entirely too slow for this market but I am content to remain as I am a conservative in all such matters," said Wells, who was approaching the age of fifty.

Carter and Washburn were doing a good job, There was a need for a "competent" bookkeeper. Living expenses were "enormous." Profits were increasing, however. Wells was told by fellow businessmen "that it is only a matter of time -- that no concern ever started with better prospects [than Wells Fargo] or had been better managed during its 7 months existence & success was certain and positive." There was a need to increase capital, however, "as it is now but a one horse Bank compared with those around us."

California was not for Wells, but he could see that it fit the needs of others. He could hardly wait to return. "I am content to stay in NY if I ever get back." Then, for a moment, Wells got caught up in the contagion. At 11 P.M., as the firm rushed to get the shipment on the outbound steamer, Wells wrote: "This is a great country & a greater people."

In the Gold Country

The surviving portraits of the founders date the two men. The photograph of John Quincy Jackson, Wells Fargo's Auburn agent, is amazingly contemporary -- perhaps a young man on the make in Silicon Valley in the late 1990s. The times were similar. Jackson and California fit each other.

Auburn was on the money trail. The mines in the nearby central district fed into Auburn, which was at the intersection of four main roads. From Auburn the gold went to Sacramento by stage and then San Francisco via river steamer.

Jackson arrived in California in 1849. After holding a series of jobs, he went to work for Wells Fargo at the age of twenty-one in 1852. He was one of Carter's hires and opened the Auburn office, of which he was quite proud: "The business I am engaged in requires my whole attention and is far beyond my years," Jackson wrote his family. "I might have staid in Virginia till I was as old as Mathusalem (or some such name) and never had $1000 entrusted to me or been worth anything myself, while here I have charge of a large Express Office and Banking house."

Jackson was ambivalent about California: "I have a great attachment for this country although I hate its ways." He loved the climate but found "the present appearance of society" a bit rough. He had had no luck mining with nine fellow Virginians and was "perfectly satisfied" working for Wells Fargo. He had gained instant status in the community: "My position throws me in contact with the heaviest business men of the state -- Bankers, Lawyers, Judges, Merchants & all do business through us."

The young man wrote his brother a detailed description of what an agent's long work day consisted of in October of 1852:

What I have to do is quite confining, staying in my office all day till 10 at night buying dust, forwarding & receiving packages of every kind from and to everywhere, filling out drafts for the Eastern Mails in all sorts of sums, from $50 to $1000, and drawing checks on the Offices below when men wish to take money to the cities, as it is a great convenience to them to have a check instead and it saves us the trouble of shipping coin up from below for purchasing dust. I have just come from the Post Office, from which I have got 100 letters to be forwarded to the different parts of the country to which they are ordered by Express. On these I make $25 as my charge on each is 25 cents. This comes around twice a month and I generally get out about a dozen 3 times a week besides letters from within the state. This alone pays quite a sum, nothing like my expenses however, as they are necessarily heavy, but not so heavy but that they leave me a handsome sum each month on all my income. Mother says rolling stones gather no moss, but whether they do or not I am always going to roll when the "ship is about to sink" and rolling will save me.

As the height of the Gold Rush receded, Jackson realized that he would "never make a great deal here." He purchased a small house that he rented at a modest profit, invested in a sawmill, and was too busy to help the visiting scout Kit Carson sell some sheep: "I could be of little service to him, as he knows everything about the market -- likely a good deal more than I did."

Young Jackson had an eye for the married women, there not being many available single women. The crossroads location of the Auburn office aided business, which was increasing in 1854. Once a week Jackson rode to the river settlement of Murderers Bar to buy gold dust.

On the night of February 22, 1855, Jackson attended a ball, and he did not get to bed until 4 A.M. He wrote of his experiences the next morning when a financial panic struck San Francisco:

At 8 o'clock I was awoke up by a messenger handing me a telegraphic dispatch from our firm below, to the effect that Adams & Co had failed to prepare for a run. Here was a pleasant message and I instantly got up & at the moment I reached the door crowds were running towards the office. I knew that our funds would not meet all our outstanding draft certificates....Very soon Adams Co here had paid out all their funds and still were short some $20,000. The crowd was now furious and banking hours drawing nigh. What was worse still was my being alone in the office, my assistant a short time since being transferred to the Iowa Hill office. I saw no other plan but to open and let it go as far as it would. Paying out commenced and the work got pretty warm when two or three of my personal friends came forward and offered their assistance to the extent of their means. One of them being very popular and a substantial man, his presence served to allay all excitement and to instill confidence, as to our means, to the crowd. As they dispersed and the matter became a little quieted I went outside and made arrangements for funds nearly to the amount of all the demands against us. The time ran smoothly till about 4 pm when it was telegraphed that Wells Fargo & Co had suspended in San Francisco. This fell like a death knell to me but as far as this office was concerned I could weather it. When the news was spread around the crowds commenced assembling and pretty soon the paying out was lively. But as there seemed to be no lack of funds and my giving personal assurance of their safety all was quieted for the day. This morning I recd a dispatch from San Francisco Office that their house would open on Monday next and through the day have rec'd several of the same purport. We have had but little trouble so far today & I am in hopes we will go through the storm safely.

For Jackson, the banking crisis "was the proudest time of my life." He was congratulated by his superiors in San Francisco and cheered by the grateful community. Four months later Auburn was destroyed by fire. Everything in the newly refurbished wooden office building was burned except the contents of the two-ton safe. Soon the town was alive with the sounds of rebuilding. The Wells Fargo office would be rebuilt of brick, the agent vowed.

Jackson left California in the early 1860s. Neither Jackson nor most of the '49ers had made their fortunes, but it had been a very lively time. His California friends wrote him about the hard, boring times they were having in their later years. There was a great deal of yearning in their letters. Jackson died in his hometown of Petersburg, Virginia, in 1899. The retired merchant left a small estate to his three daughters.

Copyright © 2002 by Philip L. Fradkin

Meet the Author

Philip L. Fradkin is the author of eight critically acclaimed nonfiction books on the American West and Alaska. At the Los Angeles Times he shared a Pulitzer Prize for coverage of the Watts racial conflict, was a correspondent in Vietnam, and was the newspaper's first environmental writer. Fradkin was the assistant secretary of the California Resources Agency and western editor of Audubon magazine. He has taught writing courses at the University of California at Berkeley, where he is a consultant to the Bancroft Library, and a California history course at Stanford University. Fradkin's most recent book is Wildest Alaska: Journeys of Great Peril in Lituya Bay. He lives on the coast north of San Francisco.

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